Sequoia Cut Back The Size of Crypto Fund

According to sources familiar with the matter, Sequoia Capital has reduced the size of its crypto investment fund from $585 million to $200 million.

Additionally, the venture capital firm has cut back an ecosystem fund that invests in other venture funds from $900 million to $450 million.

In March, Sequoia informed investors of these changes, citing market conditions that have been characterized by a prolonged downturn.

The company intends to focus on supporting young startups with the reduced crypto fund, instead of larger companies that have faced challenges in current conditions.

The two funds, which were first announced in 2022, included a crypto-focused fund that had planned to invest up to $600 million in “liquid tokens.”

Earlier this month, Bloomberg News reported that the firm had undergone a VC team reshuffle and let go of two crypto investors.

In the previous year, the firm had to write off its investment in the unsuccessful crypto exchange FTX, resulting in a loss of value.

According to a report by Bloomberg, FTX Trading had previously accused Genesis of owing them up to $2 billion.

This claim could have caused delays in Genesis’s court proceedings after the company filed for Chapter 11 bankruptcy protection in a New York federal bankruptcy court last January.

Genesis faced financial losses following the collapse of Two Arrows Capital and FTX, two crypto hedge funds.

Genesis’s top 50 creditors, including Gemini, the crypto exchange co-founded by the Winklevoss twins, have outstanding debts amounting to approximately $3.6 billion.

Both Genesis and Gemini have filed motions to dismiss a lawsuit filed by the Securities and Exchange Commission earlier this year.

The SEC had accused the companies of violating U.S. law by conducting an unregistered sale of securities through the Earn program.

However, Genesis argued in a recent court filing that Earn involved loans, not securities, and that the SEC had not provided sufficient evidence to prove otherwise.